California unions push to extend “temporary” tax hikes

The Golden State’s most powerful special interests invent a new crisis to protect their share of the state budget.

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In 2012, a slim majority of California voters approved Proposition 30, a ballot initiative which increased taxes in order to offset draconian cuts to education funding in that year’s state budget. At the time, Governor Jerry Brown (D)—as well as the official title of the measure itself—insisted that the new taxes would be temporary. “I said that’s a temporary tax,” he told reporters in January 2015, when pressed to comment.

But thanks to the Golden State’s powerful union lobby, those “temporary” tax increases might remain in place until 2030.

Several of the state’s most influential unions, including the California Teachers’ Association (CTA) and the Service Employees International Union (SEIU), banded together to gather nearly a million signatures to place the extension on the ballot for this November’s election. The measure would allow Proposition 30’s sales tax hike to expire, while extending its increase of the state income tax—now the highest in the nation—for more than a decade.

Like the 2012 measure, the new proposal has been billed as a temporary emergency measure to save underfunded schools which would only impact California’s wealthiest taxpayers. “Budget forecasts show that unless we extend the taxes on the wealthy which would continue to bring in an average of $8 billion in annual revenues, our public schools will lose nearly $4 billion and our state budget will face a deficit of more than $4 billion in the first full year alone,” portended a press statement from the CTA. “[This measure would] spare education and other vital services from a repeat round of devastating budget cuts.”

But extending California’s already high taxes for another decade could have a deleterious long-term effect upon the state’s tax revenues. According to The Mercury News, the Golden State already collects nearly half of its personal income tax revenue from the wealthiest one percent. Enacting an extension of Prop. 30 in November might alienate some of these taxpayers, forcing the state to scramble for more revenue down the road.

Additionally, unlike in 2012, California’s schools do not face any budget cuts if the extension fails. Rather, they would merely receive less of an increase in funding than they otherwise would. Proponents’ claim that the state budget will face a vast deficit without the tax increases is also overblown. As Capitol Public Radio’s Ben Adler concluded, “there may be perfectly good reasons to extend the Prop. 30 income tax increases this fall, but a looming state budget crisis isn’t one of them.”

The usual assortment of taxpayer protection and business groups, including the Howard Jarvis Taxpayers Association (HJTA), oppose the measure, but their efforts against it have been tepid so far. A search on the HJTA’s website found no press releases discussing the extension proposal; in the meantime, the list of groups backing the November initiative grows longer. In an interview with the Los Angeles Times, one conservative political consultant predicted that the anti-extension effort would receive little financial backing. But I spoke with another Sacramento political operative who thinks this ballot measure will spark an all-out brawl leading up to November. “There will, in fact, be a massive campaign against this tax increase,” my source told me.

The unwillingness to commit to full-scale opposition to the extension may be a reflection of the tremendous financial, organizational, and rhetorical resources of its proponents. In the 2000s, the CTA alone spent more on political campaigns and contributions than any other special interest group in the entire state. The California Medical Association (CMA) and the California School Employees Association (CSEA), also backing the measure, have poured millions into ballot initiatives and political campaigns in recent years to protect their status as two of the state’s most influential political power brokers. And with such a compelling narrative buttressing the tax extension, opponents of the measure face an uphill battle to convince voters, who have already expressed strong support for the extension in one early poll, to say no.

Squeezed between his 2012 promise that the taxes would be temporary and fellow Democrats, who have thrown their weight behind the new ballot initiative, Gov. Brown has refused to take a definitive position. “I am prepared to manage with it,” he said, referring to the proposal. “I’m leaving that to the people of California.”

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